Mich. Judge Backs 5% Franchise Fee

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A Wayne County, Mich., circuit judge has dismissed lawsuits against three Michigan municipalities accused of collecting an excessive amount in franchise fees.

The April 19 ruling in suits brought against Livonia, Canton Township and Westland is the latest failure of the attempted class actions. A judge in a neighboring county previously dismissed suits against Grand Rapids and Muskegon, Mich.

In all, 12 suits were filed in the state by a Detroit firm, Charfoos and Christensen P.C., on behalf of cable consumers.

The suits asserted that the 5% franchise fees the cities collected is more than was needed for reimbursement for the use of rights-of-way and to recoup regulatory costs.

A Michigan state law called the Headlee Amendment, approved in 1971, requires that new taxes be approved by two-thirds of the local voters.

The franchise-fee suits allege that any fee amount collected by the named cities that is in excess of the cost of regulation and right-of-way use reimbursement is a tax, subject to a public vote.

The suits were filed in several county courts.

Municipal attorneys argued that franchise charges are user fees that subscribers agree to as a cost of doing business with cable companies. But judges who have ruled so far have dismissed the suits based on standing, not on any arguments offered by municipalities or the class action attorneys. Judges have ruled that although the money comes from consumers, the fee is actually remitted to cities by the cable operators.

Attorneys for the plaintiffs have said they will appeal the county court rulings.

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